When Alan Parker's film The Life of David Gale, starring Kevin Spacey and Kate Winslet, goes on release next week, it will be judged on its creative merits. But behind the scenes it is also a management story with important lessons for UK business.

In his recent review of UK competitiveness for the DTI, Professor Michael Porter, of Harvard, noted that British managers often ignore the competitive advantages of industry clustering: a 'critical mass - in one place - of unusual competitive success in particular fields'.

For Porter, a corollary of clustering is 'Hollywood-isation' - the development of a highly advanced network and project-based economy as practised by the movie business. A capital-intensive project involving the management of highly talented individuals to a tightly focused goal, David Gale is a case study of both.

The project germinated in September 2000, when Parker contacted CAA, his agents, asking to see likely scripts. Of dozens he read, one he liked was The Life of David Gale, an original script by debut author, Charles Randolf. His wife and co-producer, Lisa Moran, liked it too.

A simple beginning to a management story of huge complexity. Count the business entities involved as the story unfolds - not forgetting that in business terms each actor is also a 'me' plc.

The script had been on the shelf at Warner Bros since 1998, when Nicholas Cage's production company, Saturn Films, had commissioned it. Cage, incidentally, was also represented by CAA.

Parker first had to convince Warner Bros to 'turnaround' the rights to Universal which, having bankrolled the start-up of Parker's production company, Dirty Hands Productions, in 1997, had first refusal on any Parker project. A key feature of 'Hollywood-isation' and clusters is almost perpetual deal making; relationship management is therefore a key source of competitive edge.

So, while cosying Warner Bros, Parker also had to convince Cage to sell his rights, entice another LA sales and production firm with a stake in the script to join the deal and finally get Universal to 'green light' the project. Stacey Snider, the boss of Universal, was on-side after a single read-through and she set about securing the rights. Parker had, therefore, what amounted to an 'amber light' for the concept and an indicative 'below-the-line' budget - the amount, excluding stars and marketing, which it will cost to develop the actual film. It is at this point that the real finessing takes place.

A studio will not risk $40 million (the below-the-line budget for David Gale) without an established star. Notwithstanding that, as Parker says, 'the studios prefer Tom Cruise to be in everything', as an experienced participant he would have a list of six acceptable actors for each lead. With an amber light but no star, Parker decamped to Texas, the film's setting, for an initial recce - using his own money.

At that point there was a six-month (unpaid) delay because of uncertainty around a possible actors' and screenwriters' strike. In May 2001, Universal released just enough money to conduct a proper recce. That completed, Parker still had to get the star names on board.

In July he received a call from Kevin Spacey, agreeing to do the film. The green light came in August, triggering another feature of the Hollywood system. The three full-time employees of Dirty Hands, plus line producer, accountant and a handful of colleagues (all so far working unpaid) exploded to more than 200 who would actually make the film.

These included several trusted collaborators who had worked with Parker before. In effect, they were 200 sole traders with whom Dirty Hands would have separate time-specific contracts. These were paid by an outsourced company which was, in turn, engaged by Valour Films Productions, a 'temporary corporation' set up for the purpose.

With the green light and staff secured, filmmaking could start in earnest. The actual shooting of the film is an article in itself, particularly the role of the director in managing the process and the talent. Despite the bust of Stalin in his office, Parker is actually a mild-mannered autocrat who commands enormous respect on the set, a respect that is the product of loyalty rather than fear.

To manage the budget, as opposed to people, the studios use something referred to as 'hot costs' - essentially a real-time accounting system. Parker says: 'Every single day, especially when we're filming, which is when we're burning lots of dollars, every single morning, every single penny spent is analysed by the studio directly online.'

Filming was completed in 61 days, on schedule and within budget. After editing, the film was ready for sale. The first decision was the release date. Parker wanted a November 2002 release to compete for Oscar nominations. He has a good track record with the academy and David Gale had 'serious' content.

The studios, however, felt that the competition, Gangs of New York and The Hours, was too strong, while Catch Me if You Can, a powerful populist tale, would harm it at the box office. So Snider favoured February. Parker concedes: 'Stacey Snider is absolutely the one in charge - she's my boss.' February it was.

David Gale was premiered at the Berlin Film Festival and was generally well received; but reviews in the US were mixed and sometimes even hostile. Therefore, selling the product continues. Distributor United International Pictures believes in the film and is urging faith, counting on marketing and word-of-mouth to offset the critics' antipathy.

After three years on the project, Parker's involvement is now limited to talking up the product. The distributor is responsible for extracting value for the studios and other investors, to re-coup total investment of about $100m. Its success in doing so will, in turn, affect Parker's marketability when he next approaches a studio for backing.

David Gale highlights the absolute premium placed on personality and relationship management in establishing and maintaining horizontal networks. Without Parker's long-established network of colleagues, the film would never have been made; without his reputation, also built up over many years, the finance would not have materialised.

The proximity of participants in the cluster reinforces these advantages. In theory, digital technology means that post-production can be globally located; in fact, most of it is likely to remain in LA. As filmmaking evolves, the cluster both contributes to and eases the process, helping to safeguard its position. The message for British business is: see David Gale for its management lessons, even if it doesn't win an Oscar.

· Dr Chris Brady is Associate Dean at the Cass Business School; a British Academy grant partially funded his research